Asda is the latest retailer to come under scrutiny over tax avoidance after it was revealed that payments it has made to US parent Walmart has cut its UK tax bill by £250m.
The UK supermarket has paid almost £870m to parent Walmart in the seven years to 2011 for “technical assistance, services and royalties” according to its company accounts.
The payments have slashed Asda’s declared profits and have therefore reduced its British corporate tax bill.
Asda’s payments, which average at more than £124m annually according to The Sunday Times, were a legitimate business expense according to the grocer.
A spokesman told the newspaper: “The transfer pricing for those services is agreed between the UK and the US tax authorities and Asda paying less tax in the UK means Walmart pay more tax in the US…all multi-national groups regardless of where they are based, are subject to such transfer pricing arrangements.”
The disclosure comes as prime minister David Cameron voiced his concern about foreign-owned firms diverting profits away from Britain to low-tax countries. In recent months, Apple, eBay and Ikea have come under fire.